The sunk cost can't be recovered, while the opportunity cost can play a critical role in helping to decide the company's financial future. While the company may bring in an additional $1,000 a month by leasing its building, the company may miss out o... Read more
If this occurs at month-end, the deposit will not appear in the bank statement, and so becomes a reconciling item in the bank reconciliation. A deposit in transit occurs when a deposit arrives at the bank too late for it to be recorded that day, or i... Read more
Consider having the internal audit staff review prices for a sample of sale transactions, to see if the margin and markup concepts were confused. If so, determine the amount of profit lost as a result of this issue, and report it to management if the... Read more
Items not properly includible in income, such as losses or deductions disallowed under the basis, at-risk, passive loss or excess business loss rules. Under this fact pattern, the greater QBI deduction goes to those being taxed as sole proprietor or ... Read more
On the other hand, office equipment encompasses material items having a life of more than one year. The assets meeting a company’s capital threshold are treated as office equipment. Financial statements can be represented in a simple form or as... Read more
Insurance companies like MetLife, banks, and other financial institutions have large investment portfolios. In this respect, OCI can help an analyst get to a more accurate measure of the fair value of a company's investments. The relationship between... Read more
Until there is a clear understanding of the market and production, it would make sense put further purchases on hold. The key to managing inventory levels is to have visibility to inventory trends. Usage or sales trends are important indicators of po... Read more
Accounts payable may be converted into notes payable upon agreement between a company and its vendor. In many cases, a company may be restricted from paying dividends or performing stock buybacks until the promissory note has been repaid. When a comp... Read more
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers whe... Read more
If the company wrote off any uncollectible accounts during 2009, it would debit Allowance for Uncollectible Accounts and cause a debit balance in that account. At the end of 2009, the company would debit Uncollectible Accounts Expense and credit Allo... Read more
